Calif. legislators debate utility rescue proposal

SACRAMENTO, Calif. -- California could be out at least $1.3 billion for emergency electricity before lawmakers construct a long-term fix to the state's botched energy deregulation program.

Lawmakers want to negotiate a deal for wholesale electricity contracts for up to ten years to avoid a power crunch in the coming decade.

So far, the state took just 12 days to spend $400 million approved earlier this month by the Legislature to buy electricity for financially strapped Southern California Edison and Pacific Gas & Electric.

Both have been denied credit by suppliers, and say they are $12.7 billion in debt because of soaring wholesale power prices. The state's deregulation law bars them from recouping their costs from customers.

Gov. Gray Davis ordered the state Monday to spend up to $400 million additionally to buy power with money from the Department of Water Resources budget.

And on Tuesday, the Senate Appropriations Committee began discussing a bill that would set aside still another $500 million to continue short-term purchases while the state negotiates long-term contracts.

Consumer advocates complain that the state may be helping pay off utility debts at taxpayer expense and by allowing rate increases.

''There will be massive rate increases for consumers and a taxpayer bailout for utilities,'' said Medea Benjamin, a former Green Party candidate who was among about a dozen protesters Tuesday outside the office of Assembly Speaker Robert Hertzberg. ''It's a double whammy.''

No lawmaker has said proposed legislation would include rate hikes, but state senators on Tuesday discussed using electricity rates to pay back long-term revenue bonds that would be used to fund the state's wholesale energy buys.

Meanwhile, state regulators continued an hour-by-hour scramble for power. After a few days without outages, workers at the state's Independent System Operator, which runs California's power grid, worried about the possibility of blackouts.

''Supplies are tight today, much tighter than yesterday,'' said ISO spokeswoman Lorie O'Donley.

The energy shortages are blamed on the state's 1996 utility deregulation law, high demand and tight supplies.

SoCal Edison says it has lost about $4.5 billion because of skyrocketing wholesale electricity costs.

An independent audit released Monday said SoCal Edison gave its parent company $4.8 billion in dividends in the five years leading up to the electricity crisis -- enough to have covered the $4.5 billion power bill run up by the utility since May.

SoCal Edison vice president Thomas Higgins said money that went to the utility's parent company was used to repay power plant investments by shareholders.

Sen. Kevin Murray said the report shows the utilities should offer concessions.

One bill before the Legislature calls for the state to issue revenue bonds to help the utilities pay off their debts, then pay the bonds back by taking a stake in the companies. The companies want rate increases, but have opposed giving the state a stake.